Real Estate Investment Analysis: What Makes a “GOOD” Deal?
Whenever Reel Property Solutions, LLC is in contact with a potential property, a Real Estate Investment Analysis must be completed to determine if this is a “good” deal. Here are some of the criteria for the real estate investment analysis:
- Motivated seller: What is causing the motivation? Typically, the main reasons are but not limited to:
- Financial burden
- Divorce
- Relocating and need to move ASAP
- Probate
- Physically distressed property
- Want to downsize or upgrade
The important part of knowing the motivation factor and level of motivation is when will the seller want to close and the terms to go along. For example, the real estate investment analysis could reveal the seller is including all contents with the property at the sale, thus this will be a huge factor in determining the hold time since the contents would need to be cleared out before renovations could begin.
- Location: This will ultimately determine if Reel Property Solutions, LLC will place an offer or not due to:
- Near railroad tracks may hinder the next buyer
- Near where you work is probably a big plus!
- Rural living? Urban? Small town?
- How does the neighborhood look?
Perhaps the location would not be a great resale area. Reel Property Solutions, LLC had once toured a property on a gorgeous 1-acre lot in a quiet area; however, the road getting to this property was not maintained very well- narrow, full of potholes, and doesn’t get plowed right away during a snow storm. Factors such as the numbers didn’t line up, the property was more dilapidated than described, in addition, the final reason to indicate the real estate investment analysis was not a “good” deal was because of the location.
- Due Diligence: Or a fancy way of saying RESEARCH! Fortune Builders has taught all their students that even a little thing can be a big deal. For example, what if something didn’t line up with:
- Crime stats- keep everyone safe!
- Figure out holding costs
- Paperwork OK with Title Company?
- This be a good fit for another person within the network?
- Remodeling contractor bids
With remodeling contractor bids, this can vary greatly from person to person. Some companies only do windows and siding; some companies only do interior work; some companies have a minimum dollar amount to make worth their time. Therefore, establishing a quality relationship by knowing what a remodeling contractor will or will not do can save time during the real estate investment analysis.
- Follow financing rules: Financing is the ultimate deciding factor if Reel Property Solutions, LLC can further proceed. If financing says YES, then, GREAT! However, if financing says NO, then onto another financing source! These are some things financing sources will examine to determine the yes or no answer:
- Purchase price/ARV/ROI
- Amount of profit
- Hold time
Most financing companies will allow for a 6-month hold. That means from the day the property is in possession of Reel Property Solutions, LLC until the property is resold, this should be 6 months or less. Therefore, if the property needs extensive work based on the real estate investment analysis, then that could be better for a network for Reel Property Solutions, LLC.
- Exit strategy: Reel Property Solutions, LLC can’t move into every house as a home! Here are some ways to “pass the baton” with a property:
- Wholesale
- Flip and resell
- Hold for passive income
- Hold for personal use (and must refinance loan)
In case of needing a refresher about the term WHOLESALE, check out the blog What is Real Estate Wholesaling? (Posted on June 15, 2017). Hold for passive income indicates the property will be a rental of some sort.
- Fortune Builders for advice: This could go on and on and on and on… because the experts here have such a plethora of knowledge about how to conduct and interpret a real estate investment analysis, that Reel Property Solutions, LLC can get answers from:
- Real estate experts
- Network of other investors through a private Facebook group
- Live events, such as a week-long workshop to talk face to face about real estate matters
- Someone to analyze the numbers and give feedback
For more information about Fortune Builders, go to: http://fortunebuilders.com/.
Since networking is a huge part of business, if your property isn’t a “good” deal for Reel Property Solutions, LLC based on the real estate investment analysis, not to worry- there is someone else who would be interested in the purchase! Many sellers ask how is the offer price determined?, how is the rehab price known?, what about the what-if’s?, etc. The short answer is the real estate investment analysis. The long answer is described above. This is an outline only. Many other factors specific to a property will be reviewed. The most important piece of information for the seller is knowing that Reel Property Solutions, LLC wants a transaction to be a WIN-WIN for all involved!
If you or someone you know is interested in selling their property, contact Reel Property Solutions, LLC right away!
info@reelpropertysolutionsllc.com
507-218-8788
